| Independently Powered Energy News

Consumer advocates are challenging the cost effectiveness of $500 million in proposed utility demand-response program spending over the next three years in documents filed with the California Public Utilities Commission Aug. 22. The debate resembles one involving the cost-effectiveness of utility spending on energy efficiency programs ordered by the CPUC. As regulators eye a decision on the massive spending plans in late October, consumer advocates want the CPUC to weed out $87 million of uneconomical measures in the plans that are not expected to save ratepayers more than they cost. Even the grid operator--charged with preventing rolling blackouts on the hottest days of the year--is skeptical of the plans. “Each proposed demand response program,” according to California Independent System Operator attorney Baldassaro Di Capo, “must be required to stand on its own and not rely upon bundling within the overall program portfolio to bring the average up to par.” The spending--outlined in plans filed by investor-owned utilities in March--aims to shave more than 3,400 MW of electricity load by 2014 during periods of peak demand. That’s the equivalent of the amount of power produced by six medium-sized gas generating plants, which cost about $600 million apiece to build. Consumer advocates admit the goal is laudable, acknowledging it’s intended to help integrate higher levels of intermittent renewable energy into the grid and cut air pollution and greenhouse gas emissions. However, Division of Ratepayer Advocates attorney Lisa-Marie Salvacion asked the CPUC to throw out 10 separate programs proposed among utilities because they are not cost-effective. Among them are various peak pricing and capacity bidding programs outlined in the plans. In response, utilities maintain they need to get started with some of the uneconomical programs in order to achieve the panoply of state energy goals--from integrating 33 percent renewable energy into the grid, to charging up what’s expected to be an ever-increasing number of electric vehicles. “Customers will need access to a broad, complementary range of programs and technologies, including dynamic pricing, in order to maintain and increase the amount of available demand response,” contended Pacific Gas & Electric attorney Mary Gandesbery. In CPUC evidentiary hearings in July, San Diego Gas & Electric measurement and evaluation supervisor Kevin McKinley maintained that while individual elements are not cost-effective, the overall proposed programs would provide ratepayers with more net savings. Salvacion is unconvinced, saying, “Ratepayers cannot continue to fund non-cost effective demand response programs still largely driven by commission policies developed five years ago.” Given economic conditions, plus budding independent companies that aggregate demand response by installing energy management systems in buildings, it’s time for the commission to review the necessity of the utility programs, she maintains. Alliance for Retail Energy Markets attorney Douglas Liddell recommends phasing out utility run demand-response programs altogether. The CPUC seized on demand-response programs as a counter to 2000-01 energy crisis power shortages. It further ramped up demand response after the heat storm of 2006 put unusual stress on the grid. Unlike those days, however, the state is flush with generating capacity. An Energy Commission analysis also projects muted growth in demand (see story on page 8).

No Result